POVERTY REDUCTION STRATEGY TN

which was in operation since 1985. The new scheme extends coverage to all the food
crops as well as oilseeds, commercial and horticultural crops. The premium rates vary
from 1.5 to 3.5 percent of the sum insured depending on the crops. There are actuarial
rates for the commercial and horticultural crops. Small and marginal farmers are entitled
to a subsidy of 50 percent of the premium charged from them to be shared on 50:50
basis by the central and the state governments. At present this scheme is being
implemented by 21 states and 2 Union Territories.
A Pilot Seed Crop Insurance Scheme was also introduced from the Rabi season of
1999-00 to protect seed growers in the event of failure of a seed crop. This scheme is
currently in operation in Andhra Pradesh, Gujarat, Haryana, Karnataka, Madhya Pradesh,
Maharashtra, Orissa, Punjab, Rajasthan and Uttar Pradesh. The seed crops of paddy,
wheat, maize, jowar, bajra, gram, red gram, ground nut, soyabean, sunflower and cotton
are covered.
c. Direct Cash Transfer Schemes
Many economists argue that it is more efficient to introduce direct cash transfers to poor.
Such schemes have been introduced in Mexico and Brazil. These schemes can be made
conditional on the families satisfying certain criteria like children going to school or
receiving basic immunization vaccinations. There are mixed views about the role of
conditionalties in direct cash transfer schemes as they require follow-ups and monitoring,
and as such additional administrative costs. One argument against cash transfer has
been that they induce dependence. However, income supplements are very effective in
the case of the extremely poor. These schemes can be implemented for the poorest and
the most disadvantaged sections of the society.
It is suggested here that for the extremely poor, direct cash transfer in the form
of ‘social income’ may be administered to the first two deciles of the BPL population in
the rural areas. It is important that the extremely poor have some minimum income to
start with because of the need for meeting access cost and overcoming participation
barriers to avail the benefit of other services provided by the government for health and
education As noted in Table 6.4, the extent of leakage is nil up to the first two deciles of
the BPL population. As a second check, the identified beneficiary may be endorsed by the
village Panchayat. The amount of income may be determined by the number of male
members including children multiplied by half the state-specific price adjusted poverty
line (per person per month) and number of female members multiplied by the full
amount of this poverty line (this is illustrative only). The money should be transferred on-
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